Leave a Comment:
6 comments
Don’t get it wrong… low yield is NOT for the risk averse. It is actually the agents who are risk averse.But Are you aware of the risk of Capital pLUs?
ReplyYes the low is yield. Thus it is for those who are risk adverse or those practice Weighted average return.
ReplyBut what is the yield? It must be low and that is why cap plus pays only 1.4%.
ReplyHaha! NTUC has just rushed to buy many corporate bonds launched in Aug 2010. Examples are NOL and Banyan Tree, Capitaland and Temasek. I’ve extracted the below portion from a 28 Aug BT article.
Notice the similar tenure of 3 years, and the fact that insurance companies bought most of it?
Also note that fact that this carries a coupon of 6.25%.
Cap Plus is always launched whenever NTUC just purchased some batch of corporate bonds. Previous batch of Cap Plus was when Ntuc bought PSA bonds paying 4-5% coupons. So it seems that profit margins for Ntuc is getting bigger now. I guess the commission is also bigger right? Previously was only 0.2%
Extract from BT article 28 Aug 2010: Record Sing-dollar bond sales in August
“Banyan Tree increased its bond issue size to $50 million from a planned $30 million, after receiving orders worth $118 million – or nearly four times the original offer. It will pay interest of 6.25 per cent a year on the bonds.
The firm will use the funds raised as general working capital, for capital spending and investment, and to refinance existing debt, it said.
Insurers bought 40 per cent of the bonds, while rich individuals and private banks bought 35 per cent, and other banks bought the rest.”
ReplyHi Nuts,
yes, that’s what the insurance companies usually do. That’s why S$ issued bonds by reputable firms are usually so “hot”.
ReplyAnother of ntuc crap product. 1.4%? What can it do? Cut losses? isn’t ntuc trying to exploit the kiasi consumers? After 3 years it is still loss in real value. Is this wealth preservation or accumulation in reverse gear?
The truth is ntuc is trying to capture market share just like last year when it got to the post to pip GE by a nose with Capplus. Obssessed with #1… by hook or crook even at a loss con the public, especially the Ah Sohs and aunties.